Why LPG price rising in India?

LPG Price Rising in India
LPG Price Rise
LPG Price Rising in India
LPG Price Rise

LPG, the Liquefied Petroleum Gas is an integral part of every household and hence the budget at home. Any rise or fall in the cost of LPG cylinder affects the financial plan of a family. The most common use of LPG is for cooking both domestic as well as commercial. In addition to this LPG is also used for running automobiles and for refrigeration etc. LPG which is the mixture of hydrocarbon gases is the product obtained after refining crude oil (petroleum). Most of the crude oil is imported in India.

The present debate is regarding the hike in the price of non-subsidized LPG gas cylinders. LPG cylinders are available 4 sizes – Domestic cylinders 5 kg and 14.2 kg, Commercial Cylinder 19 kg and Industrial Cylinder 35 kg. For domestic use 12 LPG cylinders are available at subsidized rates whereas for commercial and industrial purposes rates are determined by the market price. The cost of subsidized gas cylinder in the capital is Rs 414.

Very recently the cost of non subsidized cooking gas cylinder (LPG) weighing 14.2 kg has been hiked by Rs. 16.50 per cylinder. The cost of non-subsidized LPG was Rs 906 per cylinder and after the hike it will cost Rs. 922.50 in Delhi. A non-subsidized cylinder is the 13th cylinder bought by consumer after consuming 12 LPG cylinders in a year. There is no limit on buying non-subsidized cylinders which are available at market rates. In the month of February the price of non-subsidized cylinder was decreased by Rs. 107 and in the last month the rates were cut by Rs. 23.50 per cylinder.

The reason of hike given to the common man is an increase in the international crude oil price because of the current Iraq crisis. Few months back the cost of LPG was hiked because of an increase in the average import cost and depreciating value of Rupee as compared to US dollar.

It has been said that oil marketing companies in India are suffering from a daily revenue loss of Rs 271 crore on the sale of domestic LPG, diesel and kerosene. The total revenue loss last year was Rs 1,39,869 crore

Major Players in LPG

IOCL has the largest number of refineries and capacity to produce LPG and enjoys 49% market share. Then comes BPCL, HPCL, ONGC and GAIL. Most of the private companies could not survive in LPG market because of heavy subsidy given by government in Domestic LPG segment. Such a heavy subsidy leads to illegal use of domestic LPG.

All petroleum products (petrol, diesel, PDS Kerosene and LPG) are the major source of energy and important part of economy. Thus involvement of government in deciding the price, their production and distribution is necessary. Government regulates the price of Diesel (retail sales), PDS Kerosene and Subsidized Domestic LPG.

In India major challenge and reason for price hike is more demand and less supply. Government keeps struggling to meet the ever increasing demand of energy. More than 77% of India’s petroleum needs are met by importing it from other countries and therefore price change or any other change in the international market is bound to impact the domestic market.

Again no one else but such changes at international level are imposed on a common man. We keep paying more to fulfill the revenue loss, maintenance and profit.

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